Indonesia to Run World’s Biggest Gas Deficit by 2018

Indonesia to Run World’s Biggest Gas Deficit by 2018

By Tito Summa Siahaan on 8:55 pm September 19, 2013.
Indonesia will emerge as the main driver in the international gasoline market as imports to Southeast Asia’s biggest economy increase to meet domestic demand, according to a forecast from Wood Mackenzie, a global energy think tank. “From 2012 to 2018, Indonesia’s gasoline deficit will grow from 340,000 barrels per day (bpd) to around 420,000 bpd,” Sushant Gupta, Wood Mackenzie’s Asia Pacific head of downstream research, said in a statement released on Thursday.By comparison, the United States and Mexico, which combined form the world’s largest gasoline market, will see their deficit fall from 560,000 bpd to about 60,000 bpd during the same period, and will move to surplus in the following years.

“By 2018, Asia Pacific will have moved from the 2012 surplus of 55,000 bpd to a deficit of 118,000 bpd, primarily driven by Indonesia,” Gupta said.

“Indonesia will make up most of Asia Pacific’s deficit and therefore assume the role as the main driver of global gasoline trade and price — a role that the US was playing in the last decade,” Gupta added.

According to Wood Mackenzie’s research, strong growth in gasoline demand in Indonesia is being driven by income growth, increased car ownership and government subsidies growth.

“Gasoline is expected to show the highest demand growth among all products in Indonesia for the 2012-2018 period due to strong passenger car growth, which is projected to grow at an average of 7 percent per annum during this period and forecast to rise from 45 per 1,000 people to 60 per 1,000 people from 2012 to 2018,” Gupta said.

He also said the widening gasoline deficit would present opportunities for exporters in the United States and Europe.

“As the US moves to a surplus status, it reduces imports from Europe, who must find other markets to place its surplus volumes,” he said.

Hatta Rajasa, the coordinating minister for the economy, said the government was determined not to see the situation materialize, warning that more gasoline imports would put pressure on the country’s current account balance, which is already at a record deficit.

“We must build two more refineries,” Hatta said in Jakarta on Thursday.

“We have estimated that our energy consumption will grow by about 6 percent to 8 percent a year so we need to manage it both from the supply and demand sides.”

Hatta said the government had dropped its plans to build a refinery with aid from Kuwait Petroleum, leaving Indonesia with plans to build only two refineries.

One of them will be funded by the government, while the second will be jointly developed between Pertamina and Saudi Arabia’s Aramco.

Kuwait Petroleum had requested that the government provide fiscal incentives for the third refinery, estimated to cost at least $6 billion. The government, however, said it could not grant the incentives because that would be in breach of the law.

Pertamina currently owns six refineries, with a combined processing capacity of one million bpd.